New Consumer Behaviour Will Transform the Indian Poultry Industry’s Future
India is the second largest egg producer and third largest meat producer in the world. Poultry sector is the highest contributor in the Agriculture GDP of India. There has been a consistent growth in the Indian poultry sector in last few decades.
Dr. Anjan Goswami (Author)
As per the industry experts and market research reports, the sector is likely to grow at a CAGR of 7-8% for next 10 years leading to a growth opportunity for all the stakeholders in the sector. However, different driving factors would play significant roles and differentiate an enterprise’s growth from the sector. To articulate more precisely, when we talk about the growth of any sector, primarily it is the revenue growth. However, the tools for measuring the growth of an enterprise may not always be only the revenue alone, it’s about an inclusive growth of resources, a consistent investment vis a vis its return on equity and most importantly, the profitability and sustainability of the entity. Therefore, the preparedness for the future to grow as an entity along with the growing industry trend is going to be challenging dynamics for each entity in the Indian poultry sector.
Change in Consumer behaviour :
As per the latest research done by the leading market research firm Red seer, India’s overall meat market was Rs 330K crore in gross merchandise value (GMV) in 2019 is set to grow to more than Rs 460K crore by 2024. Meat market includes fish (freshwater and sea fish), poultry (bird meat, ex-eggs) mutton (goat and lamb meat), pork and beef. However, the contribution of chicken meat in Indian meat market is highest. The online meat market has grown by 2.5X to 3X times in last two years since covid-19. It is a clear indication towards changing consumer behaviour towards more informed and concerned purchases. There has been 10-15% growth in average revenue per unit (ARPU), 15-20% enhancement in the average order value (AOV) and there has been 15-20% overall improvement in the customer retention in online meat market as the report suggests.
Courtesy: Accenture Consumer Research, conducted during April-2021
As has been reflected in the above diagram, a latest survey conducted on urban consumer behaviour reveals that the awareness about the overall social health and economy has increased over the time especially after the pandemic. An urban consumer is not only concerned about his/her own health and economy but also about the socio-economic impacts. Indian poultry meat and egg sector is the highest contributor in terms of animal protein supplement in our country. Therefore, the impact of change in consumer behaviour would be significant in the poultry sector and preparedness for future by each poultry enterprise is inevitable.
Drivers of Potential Growth: Future Opportunities and challenges in Indian Poultry Sector
Opportunities in Indian Poultry Sector:
- Change in food habit from cereals to protein, 70% of Indian population is non vegetarian. Frequency of weekly consumption is high for 90% of the meat eaters, providing opportunities for growth.
- World average processed chicken and eggs product contribution is 38% vs India’s 7%, an opportunity for growth.
- Per capita consumption is at 3.6 kg Chicken meat and 63 eggs, much lower than world average, Projected to Grow.
- Rural India market is yet to be explored, Rural consumption would expand the market reach, a growth driver.
- Online meat, eggs and meat products market is picking up very fast, opening up scopes for direct to market strategic approaches.
The Challenges:
Poultry Production Challenges:
- Regulations on Farming standards
- Ground water usage
- Land area utilization
- Limited availability of inputs and resources
- Throat cut cost competition
- Bio waste production and environment protection
- Restrict Usage of drugs and antibiotics
- Stringent quality parameters
- Cruelty to animals, Increased role of NGOs and whistle blowers
- Green farming .. Organic farming
- State of the art export centric processing infrastructure
- Investment constrains
Challenges in the market:
- Changing consumer behaviour
- Global competitors
- Import of Chicken meat and meat products
- Quality standards and price competitiveness
- Entrance of bigger multinationals
- Mergers and acquisitions
- Investment constrains
- Lack of processing and value chain infrastructure
- Lack of marketing efforts
Future of the Indian Poultry: The future of the Indian poultry can broadly be articulated in two broad segments
- A) Future of the Industry Sector:The Moderators are
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- Macroeconomic Changes
- Food habits changes
- Consumer behaviour
- Market Growth Potential
- B) Future of an Enterprise:The Moderators for growth and sustainability of an enterprise are
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- Business model
- Competitiveness
- Continuous Innovation
- Adaptability to changing business environments
- Agility
- Resilience
- Future centric focus
The Trend: Automation-mechanization- Digitalization
Like any other sector, application of technology in each stage of value chain of the poultry from production to marketing cycle is going to be inevitable for enterprises in near future. The growing concerns about the sustainable environment, growing role of social organisations, throat cut cost competition, fight for market share and lack of availability of skilled work force will enforce the poultry producers to optimise sustainable production through automation.
The Future: Sustainable Poultry
The way forward:
A balance between the ongoing business avenues, profitability and related expansion vis a vis the future possible trend in the sector and a methodical plan for change dynamics in the sustainable business model would play a significant role in determining the enterprises’ sustainable growth along with the growing Indian poultry industry.
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- Sustainable farming practices: Sustainable farming practices are going to be inevitable in future in the poultry sector, that means the farm management practices are to be scientific not only to produce healthily chicken and eggs for consumers but also have to ensure least use and recycling of natural resources, lesser land area utilization and least damage to the fertile land area.
- Investment on Infrastructure and resources: Investment on scientific fam premises, warehouses, automation, mechanization and digitalization, investment on raw materials, stocking capacity based on season and availability will be key to success. Nevertheless, attracting young talent, nourishing and retaining them into the sector would make a significant impact in the growth path of poultry sector.
- Product Quality and cost competitiveness: The cost competitiveness in the form of better conversion, better yield, productivity and efficiency would be key.
- Value addition and branding: Enhancing the product life cycle, stocking ability, forward integration, value addition and branding would help the sector improvising its customer reach with a higher willingness to pay.
- Technology adeptness: Technology is going to be a key role player in poultry sector like any other sectors, syncing technology with business model enabling to maximize profit would be a game changer in building enterprise value.
- Preparedness to face global competition: Global competitors’ presence in the growing market would increase with the participation of greater number of multinationals. Cost Vs Profit competition in quality and price would be change dynamics the entrepreneurs to be prepared for.
- Cotemporary investments: Traditionally poultry entrepreneurs are more focused in raising investment either through debt or through owners’ equity. In the near future, the contemporary investment instruments in the form of equity participation, debentures, preferential etc. would play a significant role. The enterprise value building along with profits is required to be a focus for the promoters for sustainability.
- Collaborations: Collaboration among competitors is another new dynamic for doing business wherein poultry entrepreneurs have to be open to collaborate with their counterparts for creating a synergistic impact on the business based on the individuals’ area of strength.
- Market information: Information about market, trend in the sectors, price dynamics, production information and investment towards aggregating them in a systematic manner would make a difference in decision making processes.
- Price competitiveness: Throat cut competition in price is an inevitable phenomenon in a country like India, wherein majority of the population still considers price to be as a primary factor in making a purchasing decision. Production of best quality as desired by customers and making them available at a competitive price would be a challenging decision for the poultry enterprises.
Summary:
Undoubtedly, there has been a significant change in the consumer behavior and a phenomenal growth in online meat sales market in last two years, but that does not necessary mean that every enterprise in the poultry sector has to follow the same path of selling meat online as there is intense involvement of value chain resource capability in managing cold chain and extending last mile delivery and strong hold on technology sync with business model. The more important for the poultry enterprises to observe and analyze the trend for creating opportunity by identifying one’s own strength of business areas through methodical analysis of the enterprise and create a business model to enable the enterprise remain competitive in the sector. The business model design can be in any area – from production of eggs to the good quality meat. As far as market reach is concerned, 75% of the Indian population stays in rural and there is need to understand that production of chicken meat is not only for the urban consumers alone. In fact, the highest contribution of poultry meat consumption comes from either rural or the lower income category as chicken being most economic source of protein. The enterprises focus can be towards building quality brands and create a revolution in the form of supplying best quality chicken meat, meat products and eggs to the remotest districts of the country in a competitive price. It’s not only the business, but also the way of doing business would make a difference in determining the success of an enterprise going forward.
About the author
Dr. Anjan Goswami, Director in R J Feeds Pvt Ltd, and Navjeevan Hatcheries Pvt Ltd. have got over thirteen years of Enterprise management experience in the Poultry and Food Sector across all the verticals.
Dr. Anjan has mentored and co-founded enterprises in the digital healthcare and consumer service sector. He is the present Gen. Secretary of KPFBA. He brings exposure in the areas of Business Management strategy, financial analysis, investment advisory, due diligence, and corporate restructuring of businesses and has experience of successfully closing overseas M&A deals. The Equity, Debt investments, Joint Ventures, and M&A Agreements have been his area of expertise as well.
Dr. Anjan is a Doctoral Research Fellow at ISB Hyderabad, holds an MBA from the IIM, Bangalore. Apart from being a M.V.Sc, his academic exposure also includes advanced business management training from “Capsim Management Simulation Inc” USA and studies on rural sociology under the program “understanding rural India” from Azim Premji University, Bangalore.
https://www.pashudhanpraharee.com/status-of-poultry-production-in-india/
Source-https://www.poultrytrends.in/
